TIM LESTER: His electorate, Werriwa, on Sydney's south-west fringe, is a long way from the harbour, though try buying property here and you'll know you're in Sydney.

MARK LATHAM: This estate, Macquarie Links -- if you lived here 10 years ago, when it was a vacant paddock, and said to people that there would be blocks of land for sale for $400,000 and homes up to $1 million, they would have locked you up.

TIM LESTER: To tackle this insanity, the Federal Government has asked the Productivity Commission to investigate house affordability.

MARK LATHAM: We don't need another inquiry, we desperately need some policy action and solutions to deal with this crisis right now.

TIM LESTER: So what do we need?

Well, Mark Latham talks of a youth savings scheme, a kind of superannuation for the young, so that all first home buyers would have a nest egg to buy into property.

But, as you'll see, the Shadow Treasurer has a far more contentious plan for easing the housing problem.

It all depends on how you view the issue.

Is there too much demand for city housing?

Or not enough supply?

MALCOLM TURNBULL, MENZIES RESEARCH CENTRE: If you want to bring prices down or stabilise them, make housing more affordable, then you have to do something about supply.

TIM LESTER: Senior Liberal Party figure Malcolm Turnbull chairs the think-tank commissioned last year by the Howard Government to examine housing costs.

One graph in its report charts the gentle increase since the 1980s in the cost of building an Australian home.

It shows, too, how the cost of buying the finished home with land followed the same course, until the late 1990s, when it unhitched and headed skywards.

MALCOLM TURNBULL: Why has the intrinsic value of the land, as opposed to the cost of building the house, suddenly exploded in the way it has, by 300 per cent, 400 per cent in Sydney and Melbourne over that period?

The answer really is a constraint on supply.

SIMONE BILSTON We're finding it extremely hard.

We thought we'd be in a good situation where we are at the stage in our life.

TIM LESTER: In Melbourne the supply problem is forcing even double-income couples like Simone Bilston and Barry Ensil to look out of the suburbs they grew up in.

MIKE AYERS, MORTGAGE BROKER: Many first home owners have lived in an area all their lives and would like to buy in the area they grew up in.

And the way the market is going, they can't achieve that with either their income or their savings.

BARRY ENSIL: Australia's always been termed the lucky country and everyone can make their dreams come true.

And if you can't own your first home, then it's a long way to not starting your dreams.

TIM LESTER: If we're to turn around housing supply, Malcolm Turnbull questions whether we can still afford all the restrictions on development in our cities.

MALCOLM TURNBULL: Do we all misunderstand, for example, that the price of ensuring that our own leafy, low-rise suburb remains exactly like that -- that the price of that may be that our children cannot afford to buy a home there.

TIM LESTER: More supply suggests building up in suburbs where, till now, nothing stretches to above the trees, or building out in cities that already sprawl.

Though Malcolm Turnbull insists that outer suburbs can be dragged closer by good transport.

MALCOLM TURNBULL: Distance is a temporal concept.

Distance, realistically, is measured in time.

It's not a question of how many kilometres you are from a particular place, it's how long does it take you to get there.

What's the strain, what's the agony?

TIM LESTER: But Mark Latham's not talking high-tech trains or the like.

He says keep the supply limits, tackle demand.

MARK LATHAM: Well, I think for Sydney, increasingly, it's house full sign has gone up.

There's only so much land you can release in Sydney without wrecking the natural environment and having severe air and water pollution problems.

MALCOLM TURNBULL: You can't put a fence around the city and say no-one else can move in.

TIM LESTER: Yes, you can, according to the Shadow Treasurer.

And who'd be outside the fence?

New migrants.

According to Mark Latham, the Government should use incentives, even regulations, to settle newcomers in regional areas.

MARK LATHAM: John Howard says that he decides who comes into Australia.

Surely we can also decide on a more disperse pattern of settlement that obviously helps in the Sydney housing market and helps those parts of the country that want higher growth.

PHILLIP KINGSTON, AUCTIONEER: My impression of when the Government gets involved in housing markets, they generally distort housing markets, so I'd be careful about what they did to the market place.